Syllabus

Paper 2 - Performance Management 

The Syllabus outlines the content of the paper and how that content is examined.

The ability to manage performance effectively is an invaluable skill in today's competitive environment. Increasingly, employees and organisations are being judged on how well they meet agreed targets, and as performance is often linked to rewards, accuracy of measurement is extremely important.

AIM

To give an understanding of how performance can be managed through both financial and non-financial measures. The different methods available are critically reviewed for individuals, departments, divisions and an organisation as a whole. The paper considers performance management from the perspectives of planning an organisation's operations to enable it to achieve its objectives, measuring its performance against those plans and managing the operations of the organisation towards those organisational objectives.

CONTENT

Planning

• preparation of budgets
• behavioural aspects of budgeting
• measuring performance based on budgets
• budgeting in the service industries
• future of budgeting

Measuring performance - methods of measurement

• profitability, activity, productivity
• measuring productivity
• critical success factors and key performance indicators
• benchmarking
• financial and non-financial performance measures
• Balanced Score Cards
• Economic Value Added

Measuring performance - allocation of responsibility

• Cost, revenue, profit and investment centres
• measuring divisional performance: Return on Investment, Residual Income
• Transfer pricing

Managing performance

• purchasing and materials management
• control over production
• control over purchasing
• ensuring "value for money"
• activity based costing
• interpretation of cost variances

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